Wednesday, January 4, 2012

What every business can learn from start-ups

Can ‘entrepreneurship’ be prone to scientific rigor? It sounds counter-intuitive, for sure. In my eyes, entrepreneurship is much more associated with intuition, guts and inspiration, rather than processes and rules.

Eric Ries’ ‘The lean startup’ is a brave attempt at bringing entrepreneurship to a scientific level. Did he succeed? Hell, no. The ‘methodology’ proposed in his book is nothing close to scientific, it is more an abstraction  of the things he learned as (a consultant of) entrepreneur. Nevertheless, he learned a great deal of valuable insights, and shares it without restriction in this incredibly rich book.

Concepts like ‘validated learning’, ‘minimal viable product (MVP)’, ‘pivot moments’ and the ‘5 why’s’ will definitely linger on in my thoughts about business strategy. But perhaps the strongest learning for me was the concept of ‘long batch’ versus ‘short batch’.

I’ve had a traditional economic education, where I was taught that splitting workflows in small pieces, each performed by specialized people (the long batch), is the most efficient way to produce a product. According to Ries’ experience, it is not. At least not for everyone.

I’ve made a quick attempt to put his arguments in a chart:



Thing is, if you obtain experience from selling a product (or service) early on in the process, even with an imperfect product (MVP), you quickly obtain insights (validated learning) on what the market exactly want, and can adapt your product instantly to it. It’s easier said than done, since this requires many specialized teams to collaborate –each with their own agenda- but it is definitely more efficient since you can take corrective measures earlier on compared to the long-batch.

Furthermore, your resources –especially human resources- will be working on these products all of their time (instead of waiting for measurement feedback or bottlenecks to be resolved). In that way, the short-batch concept would potentially unleash the innovation capabilities in each of these resources, since ‘if we stop wasting people’s time, what would they do with it?’ (E. Ries).

A capital question…


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